EU Climate Taxonomy rules become law

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Key Takeaways


The EU Taxonomy rules (EU Taxonomy classification system) will become operational as of January 1, 2022, providing much-needed clarity to companies and investors. It is essential to the application of forthcoming entity and product-level disclosures against the EU Taxonomy’s climate objectives, climate change mitigation & adaptation. The newly adopted taxonomy list covers around 100 economic activities divided into nine sectors.


Aims to steer investors into low-carbon initiatives and help to avoid greenwashing. We expect clearer ESG disclosure obligations as climate taxonomy rules are applied, as it provides clarifications on activity alignments for corporates reporting on CSRD (Corporate Sustainability Reporting Directive) and for financial institutions to report on Sustainable Financial Disclosure Regulations (SFDR).


This report also includes a newly updated timeline for disclosure requirements and the latest development on EU Taxonomy in regards to its proposal to include natural gas and nuclear energy with certain restrictions to be labeled as “green”. As EU Taxonomy rules mature, we expect a growing attraction to green capital and increasing investment in clean technologies.


GC Insights


Stricter disclosure mandates are getting clearer not just within the European regions, businesses with any association of the region or serving as a part of the value chains in the EU could be affected by the latest restrictions. For example, corporates could be facing compliance pressures from upstream clients in the EU or mandates from headquarters in the EU. For financial undertakings, it is a necessity to follow stricter Sustainable Financial Disclosure Regulations (SFDR), such as for those seeking to set up a UCITS fund or attracting European investors with mandates to invest in the Chinese markets.


2022 is the key year to set up in-house reporting frameworks as a reference period for better reporting and improved data structures as the timeline are expected to be maturing during 2023~2025.


More ESG Research and Insights are Available from GC Insights Contact: info@gc-insights.com for more information.